BenQ Suffers Losses, Sells Assets
Taiwan's BenQ said it lost $600 million in the first nine months of the year, and intends to sell off some of its non-core assets in order to recover from a costly and futile effort to turnaround the cell phone business it acquired from Siemens.
BenQ's sales in the first nine months totaled $4.7 billion, excluding sales connected with the BenQ Mobile German subsidiary. When BenQ took over the troubled handset division of Siemens a year ago, it was losing about $1.5 million a day.
Things were so bad that Siemens paid BenQ to take it off their hands. During the last 12 months, BenQ has ponied up about $760 million to keep the former Siemens unit alive.
Last month, it threw in the towel and forced the unit into bankruptcy. This week, roughly two-thirds of the 3,000 workers in Germany were laid off and are fighting a bitter dispute over compensation from BenQ as well as the former parent Siemens.
BenQ said Tuesday that it would sell off some operations to improve its books, and would assess the impact of the unit's failure on other operations.
''Each of the subsidiaries impacted by the filing will evaluate their financial condition and determine whether they should also file for insolvency protection. We believe the decision to seek insolvency protection on the part of our mobile-handset subsidiaries should have a limited impact on BenQ's non-handset operations,'' said Eric Ky Yu, BenQ's senior vice president of finance, said in a statement.
Yu said the company has also set aside about $360 million (NT$11.8 billion) as a one-off provision to handle loose ends, such as receivables due from the company's BenQ Mobile German subsidiary. ''Our priority will be to rebuild sales channels and boost customer confidence,'' Yu said.
Now that it is no longer obligated to fund losses at the mobile unit, ''we are looking to lower the company's debt level over the next few quarters by implementing a proactive debt-repayment plan,'' Yu said. ''With the debt-reduction plan that we're implementing, including monetization of non-core long-term investments and assets, I am confident we will quickly improve financial ratios, strengthen balance sheet, lower interest expense, and free up additional cash for further growth.''
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